Fannie Mae up 6 percent pre-open as the House overwhelmingly passed the housing bill. It will get new regulators for Fannie and Freddie, and authorizes the federal government to potentially invest billions in the two companies.
A couple consumer companies indicated slower sales for the second half of the year:
1) Hotel giant Starwood reported earnings above expectations, but guidance for the second half of the year is below expectations, due largely to expected shortfalls in timeshares (timeshare sales declined 25 percent in the second quarter, with average prices down 19 percent).
2) Chipotle Mexican Grill was a bit light, and I'll leave it to Raymond James to describe why the stock is trading down 14 percent pre-open: "Management indicated that comps decelerated as the quarter progressed and have slowed further in July on the first visible signs that its sales are being impacted by macro headwinds. Management also increased its caution about food inflation through next year -the combination of slowing sales and rising cost pressures should bring 2009 Street estimates down sharply from the $3.40 level."
1) MMM reported earnings just a tad below expectations, but here's the remarkable stat: they made $1.33 in the second quarter, but they made $1.25 for the same period last year. How many companies INCREASED their earnings from the same period last year. How did they do it? International sales now account for two-thirds of MMM's total revenues. Latin America up 32 percent, Europe 18 percent, Canada 14 percent, Asia Pacific up only 1 percent. They reaffirmed their full year guidance.
2) Speaking of rising profits...Dow Chemical's $14.89 b top line was up 23 percent, thanks to double-digit price increases. But raw material and energy costs increased 42 percent; that's why earnings at $0.81 was below expectations of $0.85. CEO Andrew Liveris said he believed the U.S. economy would continue to weaken for the rest of 2008, and the outlook for the global economy was uncertain.
3) Things are not getting better for homebuilder Ryland . They reported earnings of a loss of $5.70, well below the expectations of a loss of $0.79, due largely to impairment charges. In this case, the value of the land and inventory dropped--a lot. How much? According to Raymond James, "the land and inventory charges of $180 million are more than 6x the amount charged off in 1Q:08 and Ryland's second largest quarterly write-off to date."
4) In Europe, Credit Suisse earnings stronger than expected ($1.17 b) --in fact about double what was expected. Up 6 percent pre-open.
Also in Europe, GM and Ford aren't the only ones having problems: Daimler issued a profit warning, citing higher raw material costs.
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